Engie Earnings: 2023 Guidance Appears Conservative After Yet Another Strong Performance of GEMS

Engie has released very strong first-half results thanks to yet another outstanding performance of the general energy management and sales business. As a result, the guidance, which was materially upped in June, already appears conservative. In late June, Engie also reached an agreement with the Belgian government for the 10-year extension of the Doel 4 and Tihange 3 nuclear reactors, including a EUR 4.5 billion increase of the nuclear waste management provisions. In exchange, the total nuclear waste management provisions of EUR 15 billion will be transferred to the Belgian government. This means that Engie will no longer be exposed to the evolution of those costs reviewed every three years by the Nuclear Provisions Commission. This considerably derisks the equity story, since the nuclear provisions-related uncertainties have been fuelling a discount to peers like Iberdrola and Enel for years. All in all, we maintain our EUR 17 fair value estimate.